Screening Low Income Tenants

2 Replies

Hi Bigger Pockets,

I am getting ready to purchase my first rental property and have been reading quite a bit on this forum (thanks for all the great info). In my area (central NJ) it is very difficult to find reasonable priced investment properties that make the numbers work in good areas. Where you typically can find deals are in the lower income areas. After reading the guide on screening tenants I was left wondering the best practices on screening lower income tenants that might not have credit scores, traceable references and are paid off the books (cash comp).



The thing with low income tenants is they often don't have credit, don't care about their credit, and aren't really collectable against.

At the same time, being low income, they can work just about any job and still pay the rent (if they want to).  They don't have to find that 1 in 100 six figure job to maintain their standard of life.

Big things to check are previous landlords (maybe even stop by where they are currently living) and people often say to check out their car (is it clean and taken care of?).  You're looking for someone that is going to take care of the place and hopefully stay a year or two.  A credit score isn't going to tell you either of those things.

Greg, welcome to the low income adventure!  If you PM me your e-mail address, I'd be happy to send you my scoring sheet, which might be helpful.  The main thing to look for is no evictions, whether they are lying on previous addresses, and no money owed prior landlords, which both pop up on credit reports.  Except criminal activity, so decide what you can live with in that area.  Also figure out what occupancy you are comfortable with, since low income tend to live in higher density than one person per room.  We require a cosigner if their income isn't verifiable.  Don't listen to the sob stories, figure out an objective criteria and base your decision on that.  Good luck!

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